The bank said this change is designed to offer IO customers greater choice in how they manage their mortgage repayments, whilst also supporting borrowers who want to take advantage of today’s low interest rate environment.
The policy also applies to part IO, part repayment customers.
Miguel Sard, managing director of mortgages, Santander UK, said: “As a responsible lender, we work hard to support all areas of the market. We know that the lending landscape is changing, people are living longer and want access to borrowing into later life. By extending the age limit on our interest-only mortgages, we hope to meet the needs of this growing customer group, offering them more choice in how they manage their mortgage.
“Interest only may not be right for everyone, but we have seen appetite for interest-only propositions grow in recent years and this change will support customers who choose this method of repayment.”
The lender added: “Throughout 2017 and beyond, Santander will continue to review all mortgage products and services and will remain focussed on supporting older borrowers.”
Santander’s gross mortgage lending in 2016 totalled £25.8bn, which was a fall of around £700m on the previous year, the bank revealed in its latest management quarterly update. However, the fall was even more pronounced on net lending, which dropped from £2.7bn to £1.5bn.
Of this figure, £4.2bn went to just over 25,000 first-time buyers, while buy-to-let lending rocketed year on year from £5bn in December 2015 to £6.6bn.
A rate and criteria war is expected from many this year as lenders battle to retain market share and the buy-to-let mortgage market continues to contract.